Tax judge criticises 'fabricated AI cases' cited in appeal against HMRC

Monday 18 May 2026 12:08 pm

| Updated:

Monday 18 May 2026 12:09 pm

Restaurateur avoided contempt of court after using AI hallucinations as evidence

A former West Sussex restaurateur has avoided contempt of court after using AI hallucinations as evidence in his £51,000 tax battle against HMRC.HMRC had sent letters to Omar Rafique, former director of Karma Lounge in Worthing, in 2024 demanding payment of over £51,200 and warning that he could face bankruptcy if the debt was not settled.Rafique filed an appeal with the First-tier Tribunal challenging the penalties levied against him. Rafique disagreed with HMRC’s actions, raising several arguments, including that HMRC’s VAT calculations were incorrect and that, as he had resigned as a director, he should no longer be held personally liable. However, not only did Judge Biley dismiss his appeal earlier this month, but the former restaurateur escaped a contempt of court charge after citing fake cases in his evidence.The Tribunal found that multiple key communications and skeleton arguments submitted by him were generated by AI and were neither reviewed nor factually verified before being sent. The AI-generated documents contained numerous ‘AI hallucinations’, including completely fabricated case citations and real case names attached to incorrect propositions that did not support Rafique’s arguments.The judge said, “I understand why a litigant in person might think that using AI could help. I am sympathetic to the possible perception of a litigant in person that use of AI might create a more level playing field.”But the judge added, “There is no bar on any person using AI to help them to write their submissions, but all parties – whether legally trained or not – are under an obligation to ensure that what they submit to the FTT (or any other tribunal or court) is factually correct and true.”AI hallucinations in court Fake cases and citations in court evidence were recently in the headlines after an elite US law firm had to apologise to a judge over a case that contained multiple AI-generated hallucinations. Sullivan & Cromwell apologised in a letter to the New York federal judge for mistakes that included misquoting the US bankruptcy code and citing cases incorrectly in a court filing.A senior High Court judge last year warned lawyers about misusing AI, noting that the court has a range of powers, including imposing cost orders, issuing contempt orders, or even commencing criminal proceedings.